BBC Summary of World Broadcasts

September 12, 1995, Tuesday

SECTION: Part 3 Asia-Pacific; CHINA; INTERNAL AFFAIRS; EE/D2406/G

SOURCE: Source: Xizang Ribao', Lhasa, in Chinese 14 Aug 95 p2

BODY:

[7] Text of report by Chinese regional newspaper from Tibet Xizang Ribao'

Article 1. These regulations are drawn up in accordance with the strategic decision made by the Third Central Forum on Tibetan Affairs for accelerating Tibet's economic development, and the forum's requirement of setting up a socialist market economic system in Tibet, for the sake of opening up Tibet wider to the outside world, encouraging businesses at home and abroad to invest in Tibet, and bringing about a sustained, rapid and healthy economic and social development in Tibet.

Article 2. Resources and industries within Tibet - with the exception of those that are managed, controlled and monopolized by the state - are opened equitably to state-owned, collective, foreign-funded, incorporated and private economies, regardless of their geographical locations, or the nature of the trades and departments to which they are related.

Article 3. Outside investors' legitimate rights and interests are protected according to the relevant laws and regulations of the state and the autonomous region.

Article 4. Outside investors may operate their businesses in any one of the following areas:

(1) Setting up various forms of private businesses, joint ventures and cooperative businesses; or establishments providing scientific, technical, educational, cultural, health and other social services.

(2) Forming partnership with enterprises in Tibet; leasing or purchasing them or merging with them for business operations; or purchasing their stocks, or acting as their proprietary companies; or setting up business groups.

(3) Transferring technologies to units or individuals in Tibet, establishing technical cooperation projects with them, or undertaking their technical operations by contract.

(4) Developing compensatory trade; engaging in processing supplied materials, producing goods according to supplied designs or assembling supplied parts.

(5) Developing real estate and land.

(6) Setting up joint ventures and cooperative enterprises with businesses in Tibet.

(7) Conducting independently financed construction projects, business operations and transfer businesses.

(8) Engaging in other business operations commonly practised at home and in other countries.

Article 5. The handling of investors' investment applications shall be simplified and on a priority basis, and integral consultative and agent services shall be provided.

Article 6. Investors are encouraged to invest in the following industries:

(1) Farming and breeding; development of barren hills, slopelands and river banks for forestry; leasing of cropland, vegetable plots, orchards and ranches for operations; processing of agricultural, livestock and timber products; development of areas for demonstrating production of high-yielding, effective and quality agricultural crops ; planting cash crops.

(2) Developing land for industrial use; purchasing, leasing, and contracting part or all of enterprises'fixed assets for business operations; producing or processing high-technology and ordinary products independently or cooperatively, or through forming joint ventures.

(3) Finding and mining mineral resources, processing mineral roducts and leasing and contracting medium and small mines for business operations.

(4) Building roads, bridges and ferry piers; operating passenger and cargo transport businesses; setting up auto repair shops and gas stations; setting up joint or cooperative civil air transport businesses (including helicopter transport) to provide charter flights and catering services.

(5) Building power stations to utilize hydroelectric, thermal, geothermic power and wind energy.

(6) Developing and managing real estate or land for commercial businesses, housing construction and tourism; investing in building tourist hotels, restaurants, entertainment centres and gymnasiums; investing in providing information consultation services; and investing in building education and health facilities.

(7) Encouraging investors to take advantage of central authorities' preferential policies for Tibet and set up border trade facilities, build bases producing or processing export goods, and set up experimental retail outlets and foreign trade joint ventures (foreign trade businesses that use foreign capital).

(8) Undertaking services for the well-being of the handicapped.

Article 7. Enterprises that outside investors have established in Tibet are entitled to full operating rights.

(1) These enterprises have the authority to decide on the way they hire and pay their workers and the way they operate their businesses in accordance with relevant Chinese laws.

(2) These enterprises may acquire loans from banks in Tibet the same way the local businesses do.

(3) These enterprises, whether they are independently funded businesses or joint ventures, may take part in border trade between Tibet and its neighbours, and enjoy the same preferential treatment.

(4) Those enterprises that produce goods for export, and the joint ventures that have been approved to import goods for retail as well as to export goods, have the right to import goods they sell and export the goods they produce.

(5) Foreign-funded productive enterprises and research units do not need a licence for importing the machinery, raw and semifinished materials and parts they need to fulfil their export contracts; provided these goods are imported through airports or overland in Tibet; these goods shall be managed by the customs office. The licence they need for importing goods overland will be issued on a priority basis.

(6) Enterprises established by outside investors are entitled to preferential insurance rates for insurance policies they purchase in Tibet.

(7) Enterprises established by outside investors are entitled to preferential treatment in terms of fuel and energy supply, and the prices they pay are the same as those paid by local businesses.

(8) Within the prescribed period of depreciation, enterprises established by outside investors may determine the depreciation of their fixed assets and they may also quicken the depreciation period of their machinery.

(9) Enterprises need no approval for transporting goods to be sold outside Tibet, and those enterprises that import goods and export them after reprocessing are entitled to preferential treatment, except for those goods for which the state has separate regulations.

Article 8. Productive and developmental enterprises set up by outside investors, be they independently financed or joint ventures, pay 10 per cent of their incomes as taxes, beginning with the year they start making profits.

(1) Developmental enterprises that will operate for at least 10 years are exempted for income taxes for a period of three years, beginning with the year they start making profits; and they pay only one half of their income taxes for the next two years.

(2) Enterprises that will operate for at least 10 years in developing energy, providing communications and transport services and developing agricultural production and animal husbandry, are exempted from income taxes for a period of five years; and they pay only one half of their income taxes from the sixth to eighth years.

(3) Enterprises that engage in processing agricultural and livestock products as well as special local products, and in producing ethnic handicraft and goods catering to tourists for a period of at least 10 years, are exempted from income taxes for a period of four years, beginning with the year they start making profits; and they pay half of their income taxes for two years, beginning with the fifth year.

(4) When enterprises established by outside investors in Tibet reinvest their profits in establishing new businesses or in expanding their production, the income taxes they have paid will be fully refunded provided their businesses have operated for at least five years.

(5) Enterprises that are not in Tibet but receive dividends, interests, rents, royalties and other revenues from Tibet shall pay seven per cent of their revenues as taxes, except for those that are exempted from income tax payments according to the law.

(6) An enterprise whose export revenues account for one half or more of its sales in a year pays only one half of the taxable income tax of that year.

(7) When an outside investor sets up a business in an existing enterprise or has been approved to set up a business in a piece of state-owned land, it is exempted from paying land tax or tax on using arable land for the period in which the business is set up.

(8) For an enterprise that has carried out large and medium agricultural production, animal husbandry, communications, energy development projects, are exempted from income taxes from the first six years, and it pays only one half of the income taxes from the seventh through the 10th years, beginning with the year it starts making a profit.

(9) An enterprise that invests in setting up services that serve agricultural production, animal husbandry, peasants and herders in townships and areas smaller than a township is exempted from income tax payments and it will be reimbursed part of the value-added taxes as a village and town enterprise.

Article 9. The state has authorized Tibet to provide preferential treatment in terms of collection of tariffs.

(1) Tibet's tariff rules are applicable for commodities that joint-venture retail businesses have approved for import into Tibet from neighbouring countries to sell in Tibet.

(2) Tibet's tariff rules are applicable for machinery, materials, office stationery, furniture and means of transportation that outside investors import from neighbouring countries for their own use in Tibet, provided the total value of imports is smaller than the investors' total investment in Tibet.

(3) Businesses processing supplied materials, producing goods according to supplied designs and assembling supplied parts shall follow the bonded system according to state regulations.

Article 10. When outside investors and foreign workers remit their profit earnings and incomes outside Tibet, the amount of the remittance is exempt from income taxes.

Article 11. Investors from Hong Kong, Macao, Taiwan and overseas may reside in Tibet when they operate their businesses in Tibet, provided their investments in Tibet are at least 200,000 US dollars.

If an investor from another part of the country invests 500,000 yuan in undertaking part of a state project, he may establish residence in an urban area for one person. If he invests 5m yuan in the project, he may establish residence in an urban area for not more than 10 persons.

Article 12. Enterprises established in Tibet with outside investments are entitled to preferential treatment in terms of land use:

(1) When an outside investor invests in development of unused state-owned hills, slopelands, river banks for agricultural production, animal husbandry and forestry, he may acquire the right of using the land allotted by the state for free; but he has to develop the land according to contractual terms. He may not use the land for any other purpose without approval. After he has accomplished 20 per cent or more of his total investment during the land use period, he may rent out or mortgage his land use right. When the period of land use is over, the regional people's government may acquire, without recompense, the land-use rights and the ownership of the buildings on the land as well as the attachments. If the land-use right is to be extended, the investor has priority in using the land and the right to transfer the land.

(2) When an outside investor invests in industrial, communications and commercial projects, or in a service trade, or when he purchases and leases part of or an entire state-owned enterprise, he only needs to have the transfer of the land-use right processed at a land administration department and pay a management fee. He does not have to pay the transfer fee. When he has accomplished 20 per cent or more of his total contractual investment within the tenure of use, he may mortgage or transfer the land-use right. If the tenure of land use is to be extended after it expires, the investor has priority in acquiring the extension.

(3) When an outside investor develops a piece of state-owned land in urban areas, he only pays a relocation fee and a fee for using the supporting infrastructure. He does not have to pay a fee for land allocation. If he develops a piece of collectively owned land, he pays a fee for using the land according to the rates set for units in that district.

(4) The longest land use period is 50 years for unused hills, slopeland and river banks to be developed for commercial, tourism and recreational purposes, or for the purposes of agriculture production, animal husbandry and forestry; and 70 years for residential and industrial uses. When an outside investor has acquired the land use right, he shall proceed with the development and use the land according to the terms in the contract. The land may be transferred, rented or mortgaged during the tenure of use.

(5) The Tibetan side of a joint venture, cooperative project or other form of partnership may use the land it has the right to use as payment for the stocks it purchases.

(6) The transfer of state-owned land in urban Lhasa shall be handled according to relevant regulations of Lhasa.

(7) Increment tax on land value shall be paid during the transfer of the land use right.

Article 13. The following rules apply to outside investors when they invest outside Tibet:

(1) If, after an enterprise operated with outside investment has registered in Tibet, it also operates another business or sets up a subsidiary outside Tibet either individually or with another local enterprise because of production or business needs, it may pay its income tax in Tibet at preferential tax rates. It will also receive a 70 per cent refund of the taxes it had paid in the preceding two years.

(2) When an enterprise or subsidiary established in other parts of China by the enterprise operated with outside investment comes to Tibet to sell its products, the latter shall receive a refund of 50 per cent of the income tax it had paid; and it will also receive a refund of the full amount of the income tax if the after-tax income is to be reinvested in Tibet.

(3) An enterprise operated with outside investment shall make its own decision with regard to capital, technology and equipment to be invested abroad; and, if it needs foreign currencies and loans for investment abroad, its request shall be examined and approved by the bank and the foreign exchange administration.

Article 14. Any intermediary organ or individual who succeeds in encouraging investors to invest in Tibet shall, for its or his intermediary services, receive 1-3 per cent of the actual investment from the capital recipient in Tibet. Whoever provides intermediary services for an enterprise or establishment in Tibet through bringing in technology and management personnel shall receive from the beneficiary in Tibet a lump sum of 3-5 per cent of the additional profits that the project yields in the first year. In accordance with Tibet's regional regulations, he has to pay income tax for the sum after tax-exempted items have been deducted from it. Agencies at all levels shall assist intermediary organs in going through the collection procedures and press for payments.

Article 15. These regulations shall prevail in case the regulations prescribed in other documents promulgated in the past contradict these regulations.

Article 16. The General Office of the Tibet Regional Committee for Bringing in Outside Investment and Establishing Ties With Other Parts of the Country is responsible for interpreting these regulations.

Article 17. These regulations become effective upon promulgation.